Periscope and

International Strategy

Agenda

Benefits and Types of International Strategy

Company Overview - Netflix
Class Discussion-Netflixs International Strategy
Company Overview Periscope
Periscopes Competition
Class Breakout
What is Periscopes International Strategy
Out Take on Periscope vs. Netflix
Wrap Up and Key Takeaways

Benefits of International
Strategy

Increased Market Size

Return on Investment
Economies of Scale
Resources
Location Advantages

Types of International Strategy

International Corporate-Level
Strategy
Multidomestic Strategy
Global Strategy
Transnational

Multidomestic Strategy

Decentralized Decision Making

Competition within each country
Customize products per Region
Difficult to create global efficiencies
Variance in strategies
Worldwide geographic area structure

Worldwide Geographic Area

Global Strategy

Standardized products
Competitive Strategy
Economies of Scale
Not as responsive to local markets
Worldwide product division structure

Worldwide Product Divisional

Structure

Transnational Strategy
Global Efficiency and Local
Responsiveness
Flexible Coordination
Difficult to implement
Worldwide Combination Structure

Business Level Strategy

Cost Leadership
Differentiation
Focused Differentiation
Focused Cost Leadership
Integrated Cost
Leadership/Differentiation
Multidomestic vs. Global vs.
Transnational

Determinants of National Advantage

Modes of Entry

Exporting
Licensing
Strategic Alliances
Acquisitions
New wholly owned Subsidiary

Risks
Political
Economic
Formal Institutional Risks

Company Overview:
Netflix

International
Current Offering: 50 countries
2016 goal: Everywhere (146+)
First global expansion = contributionpositive
Competitors-for-time & competitors-forcontent
Biggest long-term competitor-for-content is
HBO
Other competitors: Amazon, Hulu, Now TV,
Viaplay, Clarovideo, and other cable networks

International
Expand as fast as possible while staying
profitable company wide
Return to growing global profits in 2017
2015 investments supporting growth
$600M in global marketing
$500M on technology development (service & app)
$3B on content

The primary forces impeding growth

Market saturation
Competitors-for-time improving offerings

Corporate Level Strategy

Global Internet TV network offering movies and TV
series commercial-free, with unlimited viewing on
any Internet-connected screen for an affordable nocommitment monthly fee
Needs to create international library appealing in
each country
Needs to license content separately in each country
from multiple suppliers with exclusive access bids
What is their international corporate level strategy?

Business Level Strategy

Focused passion brand
Wide selection of offerings with
adaptive recommendations based on
history
Dont have everything, but strives for
the best in each category
What is their business level strategy?

Mode of Entry
Licenses content in each market from
multiple suppliers with exclusive
access bids
Strategic alliances with Internet
Service Providers (ISP) with shared
interests and goals
Are these modes of entry enough?
What else could they do?

Benefits
Saturated U.S. market forces vision on new markets to grow
subscriptions
Content strategy (controllable expenses) = 25% U.S. growth per quarter
3Q13 = added more international subscribers than domestic ones
2014 international subscribers jumped 78%
Subscriber growth impact
3Q14 = 25% stock loss after subscriber growth missed estimates
4Q14 = 14% stock gain after all metrics beat analyst estimates
1Q15 = 11% stock gain as subscriber growth tops estimates again (already up
47% YTD) due to new original content domestically but financials suffer from
expansion (159 P/E and contemplating stock split)

Value proposition for new content and licensing deals with greater reach
Are there any other possible benefits to its chosen strategy?

Risks
Main Issues:
Create international library appealing to each country
License the content separately in each country (same
deliverable as in US?)
Digital infrastructure varies substantially country to country
Cost of internet plans vary (unlimited vs. usage billing
Regulatory uncertainty in foreign markets

Shrinking bottom line as domestic profits are driven into

international expansion while asking for patience from
investors until subscriber base reaches critical mass
Are there any other risks involved in its chosen strategy?

What is Periscope

http://onperiscope.com/

Meerkat vs. Periscope

Periscope Class Case Study

Competition!!
!

What is Periscopes International

Strategy?
Global Strategy leverage Twitters
established strategy and placement
International Corporate Level Strategy
Regionalization/Worldwide (outlawed in various
countries, including China)
Focus on areas with highest populations and densities of
smartphone users all on a worldwide scale
Limited diversification Periscope complements Twitter
Aligns with Core Competencies and cannot be easily
reproduced

Business Level Strategy differentiation

Offer a product and experience that arguably nobody
else can

What is Periscopes International

Strategy?

International expansion fits perfectly with

Periscopes vision and mission

Give people a pulse on whats happening around the

world
Giving journalists the ability to live feed from anywhere in
the world without the bulky equipment
Reach the largest daily audience in the world by
connecting everyone to their world via our information
sharing and distribution platform products and be one of the
top revenue generating Internet companies in the world.

Goal is to increase user base and returns

What risks do you see with Periscopes
international strategy?

Wrap Up and Key Takeaways

Wrap Up and Key Takeaways

Why go
International?
1. increase
market,
2. increased ROI,
3. economies of
scale, scope
and learning,
4. resources and
location
advantages

?
?

Higher Performance
Innovation

Wrap Up and Key Takeaways

Considerations
Types of Entry
Costs associated with modes of entry
and entering new markets
Risks
Political
Economical

Questions??

Resources
https://pr.netflix.com/WebClient/loginPageSalesNetWorksA
ction.do?contentGroupId=10477
http://ir.netflix.com/long-term-view.cfm
http://www.forbes.com/sites/greatspeculations/2013/03/05/siz
ing-up-netflixs-international-subscriber-growth-potential
/
http://www.cnbc.com/id/101487231
http://www.cnet.com/news/netflix-invades-europe-why-interna
tional-expansion-is-so-critical
/
http://www.forbes.com/sites/laurengensler/2015/01/20/netfli
x-soars-on-subscriber-growth
/
http://www.nytimes.com/2015/01/21/business/media/netflixearnings.html?_
r=1

Resources

http://bgr.com/2015/03/30/meerkat-vs-periscope-analysis-journali
sm
/
https://
www.yahoo.com/tech/what-is-periscope-and-why-am-i-watchingsomeone-114703044374.html
http://techcrunch.com/2015/03/26/abre-los-ojos/#.lyzqxy:pe9a
https://about.twitter.com/company
http://fortune.com/2015/04/01/twitter-periscope-investors/
Hoskisson, R. (2013). Competing for Advantage. Mason, OH SouthWestern Cengage Learning
https://
pr.netflix.com/WebClient/loginPageSalesNetWorksAction.do?cont
entGroupId=10477